a decrease in personal income taxes will increase the price level if the economy is operating in? a) Region 1 of the AS function. b) both region 1 and region 3 of the AS function. d) both region 2 and 3 of the AS function. e) none of the above.

Exercise D6 What is on the axes of an expenditure-output diagram?

Exercise D13 Is the equilibrium in a Keynesian cross diagram usually expected to be at or near potential GDP?

As a general rule, is it safe to assume that a change in the price of a good will always have its most significant impact on the quantity demanded of that good, rather than on the quantity demanded of miller goods? Explain.

Identify the most accurate statement. A price floor will have live largest effect if it is set: substantially above the equilibrium price slightly above the equilibrium price slightly below the equilibrium price substantially below the equilibrium price

Explain all the reasons why a decrease in a products price would lead to an increase in purchases.

What is the relationship between price elasticity and position on the demand curve? For example, as you move up the demand curve to higher prices and lower quantities, what happens lo the measured elasticity? How would you explain that?

Describe the mechanism by which supply creates its osi1 demand.

Predict how each of the following economic changes will affect the equilibrium price and quantity in the financial market for home loans. Sketch a demand and supply diagram to support your answers. The number of people at the most common ages for home-buying increases. People gain confidence that the economy is growing and that their jobs are secure. Banks that have made home loans find that a larger number of people than they expected are not repaying these loans. Because of a threat of a war, people become uncertain about their economic future. The overall level of saving, in the economy diminishes. The federal government changes its bank regulations in a way that makes it cheaper and easier for banks to make home loans.

Exercise D16 Why are savings, taxes, and imports referred to as leakages in calculating the multiplier effect?